The demise of Rudiantara, the rise of the banker in PLN
President Joko "Jokowi" Widodo backed out from endorsing former communication and information minister Rudiantara as state electricity firm PLN president director and made a swift adjustment by appointing former state-owned lender Bank Mandiri president director Zulkifli Zaini to head PLN.
The State-owned Enterprises (SOEs) Ministry officially announced the appointment on Monday at PLN’s general shareholders' meeting (RUPS). The appointment came rather as a surprise for many as news had spread out among the public that the final assessment team headed by President Joko “Jokowi” Widodo had picked former communications and information minister Rudiantara to fill the vacant seat.
Even Cabinet Secretary Pramono Anung confirmed that the final assessment team had settled on Rudiantara, and he himself had cosigned the letter.12 Some sources said President Jokowi himself had signed the appointment letter for Rudiantara and had handed it over to SOE Minister Erick Thohir. (see What we’ve heard)
Like his predecessor Sofyan Basir, Zulkifli previously worked in the banking industry, once serving as president director of state-owned Bank Mandiri, the country’s largest lender in terms of assets. Also, Zulkifli should be familiar with how the country’s electricity monopoly conducts its business as he was a PLN commissioner from 2013 to 2015.
Zulkifli’s background in the banking industry is one of the reasons he was picked for the position, according to SOEs Ministry spokesman Arya Sinulingga. He said PLN needed to strengthen the distribution network, which would require the company to have a healthier financial condition, something Zulkifli could deliver given his experience.3
Zulkifli will face a challenging task in balancing the need to improve the company’s financial health while keeping the required expenses to ensure reliable electricity supply in the country. Zulkifli should learn from the massive power outage that affected half of Java island on Aug. 4, which, according to a former high-ranking PLN executive, was due to slashing the maintenance budget to boost the company’s public image.4
SOEs Minister Erick Thohir has given Zulkifli two tasks, namely to increase the electrification rate in the country to 100 percent and to increase the role of renewable energy in the country’s energy mix.5
As of September, PLN claims, the electrification rate in the country has reached 98.86 percent. Meanwhile, the use of renewable energy still sits at 13 percent, far below the target of 23 percent by 2025.
One of the ways to help achieve the goal of total electrification is by strengthening distribution networks to reach those currently not supplied with electricity or to build independent renewable electricity power plants in remote areas, such as micro-hydro plants and solar panels.
A more challenging task is to increase the use of renewables in the archipelago. PLN would need renewable energy-based power generators with a total capacity to produce about 16.7 gigawatts of electricity to achieve the target. However, as of October, the company only owns two such power generators with a capacity to produce only 7,435 MW of electricity. Many consider this target unattainable, since the majority of the power plants for the 35,000 MW program will still use coal as their fuel.6
Zulkifli said he would undertake the tasks entrusted to him by the minister and claimed he already had strategies to complete the tasks. One of the main strategies that he will pursue is to improve the financial position of the company, which has borne losses for five years. Last year, PLN recorded Rp 35.3 trillion (US$2.55 billion) in losses.
Zulkifli will also need to watch closely the internal affairs of PLN, which has total debt exceeding Rp 400 trillion and requires annual operating capital of around Rp 80 trillion to Rp 90 trillion. If he is not careful, Zulkifli could follow in the footsteps of his predecessor and become another victim of corruption in PLN.
A source familiar with the selection process for the PLN president director position said President Jokowi had signed a letter appointing Rudiantara PLN CEO. Erick was even said to have been about to hand the appointment letter over to Rudiantara.
However, Jokowi suddenly revoked the appointment. The source said the decision had been triggered by a meeting between the President and former vice president Jusuf Kalla in the State Palace. In the meeting, Jusuf Kalla repeatedly praised Rudiantara and told Jokowi that Rudiantara is the perfect person for the job. Jokowi did not say anything about Kalla’s praise of Rudiantara and just nodded.
The meeting, according to the source, made Jokowi rethink his decision. Jokowi did not want the impression to rise among the public that the appointment of Rudiantara as PLN president director because of Rudiantara’s close ties with the vice president. He also did not want the impression the appointment was to facilitate or protect Kalla’s electricity projects in the country.
Another trigger was information received by the State Palace from an insider in the Communications and Information Ministry that Rudiantara had received money from the Palapa Ring project. However, the State Palace could not verify the information, the source said.
Nevertheless, two weeks before PLN’s general shareholders’ meeting, Jokowi revoked Rudiantara’s appointment. Another source said Erick had put forward another name to Jokowi, but the President did not approve the name. Instead, Jokowi proposed Zulkifli Zaini.
When Zulkifli sat as PLN commissioner, he was one of the harshest critics of Sofyan Basir, PLN’s previous president director, especially regarding Sofyan’s policy of issuing bonds. Also when he sat as BNI independent commissioner, Zulkifli questioned BNI president director Achmad Baiquni's decision to borrow money from China. Because of his attitude, then-SOE minister Rini Soemarno removed Zulkifli from his position as the bank’s commissioner. However, the source said, Zulkilfi's actions when he was commissioner at PLN and BNI impressed Jokowi.
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